The news is out!
In the latest official bulletin published by the Federal Tax Authority (FTA),
artists and influencers will now be subject to VAT.
You may be wondering, how? They are not businesses in the strict sense of the word!
Well, the FTA has confirmed that all services provided by these artists and influencers will now be subject to VAT, just like companies registered in the Emirates.
The bulletin emphasizes that
5% VAT will apply to all services provided by artists and influencers who operate inside and outside the country.
This includes all promotional activities carried out online on behalf of businesses in exchange for compensation (regardless of its nature), giving brands access to their communities.
These activities include promoting products or services on their social networks and blogs, such as
- product placement on Instagram,
- all paid physical appearances and activities related to online marketing and advertising,
- restaurant invitations,
- gifts given by brands
- and any other services that these public figures may provide in exchange for compensation (financial or non-financial).
This announcement was shared in the latest basic tax information bulletin published by the FTA regarding the tax treatment of services provided by artists and influencers.
The bulletin states that if an artist or influencer incurs expenses to provide a service but recovers those expenses from the client for whom they are advertising, this reimbursement falls within the scope of VAT in the UAE.
The FTA office also added that if the influencer or artist does not receive payment but receives
benefits in kind such as handbags, mobile phones, perfumes, clothing, etc. in exchange for their services, these must be
taken into account when calculating VAT.
What does this mean for businesses that pay or give gifts to these artists and influencers?
Under these conditions, a business that gives gifts in exchange for the services of these influencers must also declare VAT on these goods. This applies only to registered businesses with a TRN (tax registration number).
All these artists and influencers are required to register for VAT if the total value of the services they provide and the compensation they receive (for example, gifts and other benefits)
exceeds AED 375,000 over the last 12 months.
5% VAT
Artists and influencers also now have the option to register voluntarily for VAT if the total value of the services they provide and the compensation they receive is
higher than AED 187,500 but lower than AED 375,000.
In both cases,
5% VAT will apply and must be paid by the artist or influencer.
0% VAT
0% VAT will apply if influencers and artists provide services contractually to a business outside the Emirates.
A FEW CLARIFICATIONS:
- The term artist refers to all individuals considered performers, singers, stage artists, makeup artists, DJs, authors, and anyone engaged in an activity related to the arts.
- Influencers are simply individuals who provide services by using their public profile on social media platforms, such as bloggers and YouTubers.
- Regarding artists or influencers who are non-residents of the Emirates, if they provide services contractually to a VAT-registered business in the Emirates, the artist or influencer does not need to register for VAT. The business receiving the service must report to the relevant authorities.
- Conversely, if a non-resident artist or influencer provides a service to an Emirati business that is not registered for VAT, the artist or influencer must register for VAT.
The FTA office specifies in its bulletin that if an artist or influencer residing in the Emirates promotes an Emirati business abroad,
5% VAT will also apply.
The following example is provided:
“If a UAE-based business owns a hotel outside the UAE and enters into a contract with an artist or influencer residing in the UAE to promote this hotel on their social networks, the service provided by the influencer will be subject to 5% VAT.”
Find the official bulletin on the
official FTA website HERE.
